On Wed, Feb 18, 2004 at 09:46:51PM -0500, kdxkawboy@... wrote:
> leaving a modest profit unless F1 is guilty of padding costs like in $200 hammers,
> in which case I don't think I'd want to do business with them.
>
> Pat
Obviously you haven't worked in purchasing in the .gov or in selling
to the .gov. There is a reason for the $200 toilet seat or $100
hammer. It is to simply pay for the overhead involved for a supplier
to simply sell them what they are requesting.
When you get a PO, they give you a quantity and a MIL spec number.
The PA rarely if ever knows what the item actually is, if they do know
it's a hammer, they won't know specifically what sort of hammer.
Let's make the scenario even more specific, let's say it's for a
'bolt'. The reason here is that not only are there a million
combinations of what a 'bolt' could be, but it could very well be a
life critical application, say in the wing of an airframe. You can't
just guess, you really have to supply the exact item they need.
Now as a vendor, you have to find out what that MIL spec number is,
keeping in mind I was in the 'biz' in the 80's before the dawn of
cheap computing. This meant that you needed a subscription to the
GSA's complete catalog. At the time I think it was $30k-$50k
something like that and would literally fill about a thousand sq ft.
of space to store. That was out of the question for most vendors.
First step, see if some other vendor had a MIL spec cross-reference
that they published and pray it was on their listing and that it was
truly a standard item you could falsify the spec stickers for and
provide at reasonable cost. This would be a $.05 grade 5 plain old
bolt, that at this point you could sell for $.08 to make up the time
you spent researching it.
If this isn't the case, now you have to pay a MIL spec cross reference
service to 'research' the item $35 for each item number or a five
figure annual subscription fee. To find out it is a grade 5 plain
steel hex head cap screw, it just cost you $35. Of course you have to
pass that on in the cost. If the PO is for a single bolt, it is now
$35 + cost of bolt + profit margin (taking into consideration the
phone bill and time of the person that tracked it down).
Even more interesting is if you find out that the MIL spec number is
to a sole-source provider machinist with yet another generic
description so you have to contact that company and order a sample to
see what it actually is. I $hit you not, I had to track down a number
that brought me to a machine shop in OK City area that produced the
part. I ordered the part. $35 to look it up, time spent before I
resorted to that, $18 for one of the item cost from the machinist,
shipping charges to get it to me. I get the part, it's a grade 5
plain steel hex head cap screw. Of course I had to have a local guy
check it out to be sure it was just that. Somehow through politics
this guy in OK was awarded a contract to basically resell a bulk bolt
at $18/each. I forget the quantity of the order for that one, but
there was a good couple hundred dollars in overhead by the time we
actually shipped, that had to be made up to break even.
Don't believe what the media sells you as the truth. The same
politician that 'uncovered the widespread corruption of the $200
bolt', is the same guy that owns an interest in that $18/bolt
machine shop scam. The whole GSA/MIL spec setup was designed
surreptitiously to allow for corruption.
One last tid-bit, in order to do business with the .gov we had to be
able to float $8M in credit that took 18mos on avg to be received. We
were a relatively small business, the owner would take additional
mortgages out on his house waiting on the .gov payouts so that our
suppliers would continue our credit line as a reseller.
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